Neal Barclay: Meridian CEO on the company's profit reaching $429 million

Meridian Energy - the country’s largest power generator - has reported strong earnings in the June year, but warns the year ahead looks challenging.

The partially state-owned company’s net profit went from $95 million to $429 million - with much of the increase influenced significantly by net gains on hedge instruments of $249 million.

Meridian CEO Neal Barclay says earnings will likely drop in the coming months - and the company has invested more money to ensure there's a steady supply. 

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Episode Transcript

Speaker 1 (00:00):
Meridian Energy has quadrupled its net profit to four hundred
and twenty nine million dollars for the year. Earnings we're
up sixteen percent. The company will pay a dividend of
twenty one cents a share. Company is tempering expectations, though,
saying the twenty twenty five financial year is looking far
more challenging. Neil Barclay is Meridian's chief executive and.

Speaker 2 (00:17):
With us, Hey, Neil, hi, how are you?

Speaker 1 (00:20):
Yeah?

Speaker 2 (00:20):
Good?

Speaker 1 (00:20):
Thank you?

Speaker 2 (00:21):
Ah.

Speaker 1 (00:21):
It's kind of awkward, isn't it to be to be
reporting a big profit increase like this when everybody's just
hating on gen Taylor's.

Speaker 2 (00:29):
Yeah, well, I think the thing to understand with our numbers, well,
we are a renewable energy generator, so our results swing
around a lot with the weather. And the interesting thing
about the growth in this year's number, it's largely because
last year's number was very low at ninety five million,
and actually F Y twenty four is pretty consistent with
what FY twenty two, in FY twenty one, where so

(00:51):
it was more we had a bit of a low
number in twenty three than we had massed growth in
twenty four.

Speaker 1 (01:00):
You're not making any more of us than than you normally.

Speaker 2 (01:02):
What are you saying, Well, not in that year, but
certainly right now we are. Earnings are down quite a lot.
We're investing a lot in hedges and so forth to
sort of ensure that we've got security of supply, and
I think I'm going to talk to you about some
of those last week. But the ends are still we're

(01:23):
paying them to reduce demand. We're part of that meth
and X arrangement. We were actually paying quite a lot
of quite a high price for the gas that we're
generating from them at the moment, and so we're telling
analysts and investors just to be a bit tempered with
how it will turn out this year.

Speaker 1 (01:41):
Why do you think next year is looking so bad?
What's the problem.

Speaker 2 (01:44):
It's just that there is not enough. The lakes at
are very low level, so we've had to back off hydrogeneration,
and so we're by this is from a Meridian perspective,
we're buying generation from other sources. That's what I'm saying.
We're part of that methd X thing or paying to
the ends. It's not to actually produce son.

Speaker 1 (02:03):
Neil, do you foresee that we're going to have a
dry year, next year again.

Speaker 2 (02:09):
No, No, the lakes. I'm not that clear, boy, not
a problem. I can't guarantee that either. I can't pack
the weather that far out. I can pick the weather
about seven days out, and that's about.

Speaker 1 (02:20):
As good it will tell me this. Okay, Because you
guys obviously do keep an eye on what's going on
with the hydro dams. Do you feel completely comfortable about
dipping in knowing that next year will be fine?

Speaker 2 (02:30):
Well, we've got enough hedges, and hedges are designed to
get a physical reaction, so that's either dropped demand or
bring on other supply. We've got enough hedges in place
right now to restore these lakes back to average if
we get average inflows.

Speaker 1 (02:47):
Okay, so to hang, yes totally. But it does rely
on us having average inflows. Right, So we are kind
of at the mercy of the weather again.

Speaker 2 (02:53):
Aren't we. We We always have been. That's the nature
of our electricity system, that hydro based. And we've got
relatively small lakes, but you know, and we're working to
try and get more capacity in those lakes. So that's
that contingent storage Neil.

Speaker 1 (03:09):
One of the criticism, One of the criticisms of the
energy sector at the moment is that you guys aren't
building enough generation. How much generation have you built in
the last year.

Speaker 2 (03:19):
Well, I'll tell you, I'll go back fifteen years because
I think.

Speaker 1 (03:22):
That the last year doesn't look good.

Speaker 2 (03:26):
The last year looks good. We've just built a new
wind farmans in Hawk's Bay, Horror Parky. We're in the
middle of building a grid scale battery. We've invested a
billion dollars in the last few years. Just Meridian, if
you look across the sective numbers a lot greater. But
if if you look at the electricity sectory the last
fifteen years, demand hasn't grown a bit. The system is

(03:48):
exactly the same size as it was fifteen years ago.
But in that time the sector across the board has
invested ten billion dollars in new renewable energy and that's
replaced aging and gas flight plant. So we've been invested
in a halivar rate. It's just an absolute myth that
generators have not been investing in It's just wrong and

(04:10):
it just keeps getting put.

Speaker 1 (04:12):
Out there by c It has generation not dropped off
since the Labor Party of twenty seventeen, the Labor Government
of twenty seventeen putting that one hundred percent renewable targeting.

Speaker 2 (04:23):
No what, no renewables kept being developed.

Speaker 1 (04:27):
The problem plus sorry I should say plus also the
Onslow decision.

Speaker 2 (04:30):
Yeah, the problem there was that not as much investment
went into gas as needed to. And so that's that's
fundamentally the problem. I mean, we were always going to
have droughts and wet dimes and all of that sort
of stuff. It's just part of our system. We used
to managing it. Got what I think what caught us
all that up this year was just the rate of

(04:50):
decline and gas availability. And so when you saw those
high prices a few weeks back, eight hundred bucks, that
was because Faranaki, which is a diesel base generator, was
running that grow those high prices. Since then, we've got
method next to the table. We've got ends us off.
Things are moderating back. They're they're still reasonably high, sort
of circuit two three hundred dollars, but if we can

(05:13):
continue to build back these lakes, that will start to
moderate as well.

Speaker 1 (05:17):
Nearly you would all worried about what might happen to
your business based on what's going on in politics at
the moment, and they need to find somebody to scapeging.

Speaker 2 (05:26):
No. No, I think the system works well. I think
the politicians understand that. But obviously we've got a lot
of work to do to sort of resolve this gas issue,
and that's why we've been talking about the al and
G option. It may be an expensive option, but I
think it'll be a critical bit of infrastructure that will
provide a lot more resilience, not only to the electricity sector,

(05:49):
but all those issues. Is out there who are currently
being mentioned as well.

Speaker 1 (05:53):
Yeah, hey, Neil, thank you very much. Best of luck
with everything. As Neil Barklay, Meridian's chief executive.

Speaker 2 (05:58):
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